Bankruptcy fraud trial begins for Las Vegas casino figure

Thursday, March 8, 2001 | 11:18 a.m.

SUN STAFF AND WIRE REPORTS

TRENTON, N.J. -- Robert E. Brennan had a "virtual mania" for secrecy as he tried to hide assets from creditors after declaring bankruptcy, a prosecutor said in opening statements of the former penny stock tycoon's federal trial Wednesday.

But Brennan's lawyer argued that the case against his client was a work of fiction based on one unreliable witness.

Brennan is on trial on charges that he tried to keep his creditors from getting a share of about $4.5 million in easily concealable assets.

The charges, brought by state and federal authorities, mark the first criminal case brought against Brennan after two decades of battles with stock regulators. The most serious felony charges, five counts of money laundering, each carry up to 20 years in prison and a $500,000 fine.

Prosecutors described Brennan as a high roller who cashed in $525,000 in Las Vegas Mirage hotel-casino chips one night in September 1995, so he could conceal three years' worth of winnings.

Brennan is known in Las Vegas as a high-stakes gambler and for his association with the now-imploded El Rancho hotel-casino on the Las Vegas Strip. One of his companies, International Thoroughbred Breeders, planned to create a $1 billion casino complex at the El Rancho site but those plans went nowhere.

The El Rancho was imploded last year by new owner Turnberry Associates -- which is not associated with Brennan -- and a London-themed resort is now proposed for the site.

U.S. Assistant Attorney Paul A. Weissman said Wednesday that Brennan used a sophisticated system of international transactions that "people mostly read about in novels" to conceal the assets so he could maintain a luxurious lifestyle.

Weissman said when Brennan filed for bankruptcy in 1995 he kept hidden $4 million in bonds, proceeds of which he stashed in an account at the Bank of Scotland branch on the Isle of Man.

Weissman said Brennan used a contact, Peter Bond, on the Isle of Man to sell the $4 million in bearer bonds, which are difficult for outsiders to trace when they are transferred.

In June 1995, Brennan allegedly requested that Bond fly from Florida, where he was on vacation, to take the bonds back to the Isle of Man and cash them in.

"Less than two months later Mr. Brennan filed for bankruptcy," Weissman said. "Mr. Brennan never disclosed ownership of the bearer bonds."

During the time that Brennan worked with Bond, Weissman said, Brennan and his accountant told Bond that they wanted to observe secrecy and wanted Bond to destroy all financial statements.

Weissman also described Brennan as a high-stakes gambler who would bet as much as $15,000 on a single throw of a dice. He claims Brennan made several trips to a Las Vegas casino, and started to hoard the chips he won before eventually cashing them in.

But Brennan's lawyer, Michael Critchley, said that the case was based on one witness -- Bond. Critchley said Bond's credibility was at issue and that he was granted immunity by the government in exchange for his testimony.

Critchley said that Bond's testimony about the transactions -- described earlier by Weissman as the complicated stuff from novels -- would be a work of fiction.

"What he should have said is that the novel is written by Peter Bond and it's called fiction and it should have started 'Once upon a time,"' Critchley said.

Instead of hiding funds, he said, Brennan simply established trusts for his three children after their mother died, one of Brennan's sons became sick and after Brennan began to experience heart trouble.

And while Brennan did gamble occasionally, Critchley argued that his client often lost money as well as won it.

Brennan was known in the 1980s for his television commercials for his flagship brokerage, First Jersey Securities Inc., where he was featured stepping off a helicopter and urged viewers to "come grow with us."

The Newark native and longtime Monmouth County resident now claims Juno Beach, Fla., as his residence.

He filed for bankruptcy protection just before he was due to pay millions to compensate First Jersey investors. A U.S. district judge in Manhattan had determined they were cheated, and the judgment is now more than $78 million.